Getting Your Credit Report, Checking It and Correcting It
Credit report and credit score are an important component of your financial health. Below, we will go over why you need to check your credit report regularly and what to look for in your report.
Your credit report gives a picture of your current financial situation in relation to your obligations. In short, a credit report lets creditors know how good you are in repaying your debts. Almost all lenders and even some landlords and employers will check your credit report or credit score before extending you credit. Knowing what’s in your credit report will help you improve it, so that when you apply for a mortgage, car loan or credit card, you are approved for the loan and you get the best possible deal on interest.
Credit reports also are one of the first steps to detect identity theft. If someone is using your identity to take out loans or credit cards, it will reflect in your report.
So, whether you want to improve your credit or protect yourself from identity theft, it is important that you check your report regularly.
Where can I find my credit report?
There are 2 credit bureaus in Canada- TransUnion and Equifax. These 2 bureaus are responsible for creating your credit reports based upon the data that they receive from various creditors and other reporting entities. Not all creditors (lenders) report to both bureaus, so the two reports might be different.
You can request your free credit report from each once a year. However, you will have to pay if you want to check more frequently.
There are some online websites where you can check your credit report for free. These companies get the report from one or both the bureaus, and in exchange for providing you your report they provide you product recommendations. If you are using such websites, make sure you do your research on the company to verify that they are legitimate.
What to look for in my report?
Credit Score –This is just a snapshot of your credit report like a test grade and gives an indication of your credit standing. Going over the full report will help you understand your score.
Personal information –Your report contains information like your name, date of birth, SIN and current and past addresses. It may also contain your employment information. Make sure that this basic data is correct.
Accounts or Tradelines –This section of the credit report lists your debts- loans, credit cards, mortgages and some utility bills. Next to each tradeline will be the date the account was opened, loan amount or credit card limit, the balance, any past due amount, monthly payment, the current status of the debt and the last 24 months payment record.
Go carefully over each item making sure that everything is correct. Remember that even a single past due or late payment report can bring your credit score down considerably.
Public records –If you have filed for a consumer proposal or bankruptcy, or if there is a legal case related to a claim against you, it will show up on your credit report. These items are especially damaging to your credit report and score.
Collections –If your debt has fallen way behind, a creditor may sell the debt to a collection agency who will try to collect on it instead. Similar to public records, collection items can damage your credit.
Banking records –Bank accounts that have been closed due to a derogatory reason like non-payment of fees or overdue fees gets reported to the credit bureau.
Inquiries –Under this section will be a list of all companies who have done a along with the date that the check was done. There are two kind of credit checks- soft and hard. Simply put, a hard check affects your credit but a soft check doesn’t. Companies cannot do either kind of credit check on you without your consent. So, make sure that you go over this list carefully and take note of any company that you do not recognize.
What to do if I spot inconsistencies in my credit report?
Occasionally, there are mistakes in your credit report. It may be due to the credit bureaus, the reporting creditor or it may even be due to identity theft.
The first thing you need to do to fix any errors is contacting the credit bureau. You will need to submit a dispute form detailing the error. Make sure that you have all necessary documents to support your claim. You can find more information on submitting dispute forms for each bureau here- Equifax and TransUnion.
Depending on the error, it can be fixed directly by the credit bureau or they will start an investigation on your dispute. Any fixes will automatically reflect in your credit report. In some cases, the credit bureau will also let recent creditors who pulled your report know that there has been a change in your report.
If a credit bureau starts an investigation on your behalf, they will contact the reporting entity or creditor. If they find that the dispute is valid, they will update your report.
Make sure that you contact both bureaus to fix any errors.
You can also contact the creditor regarding your account, esp. if it is related to a debt that you currently owe. They will be able to answer any questions you may have and fix any inconsistencies directly. In this case, the creditor will inform the credit bureaus to update your credit report.
There are accounts and inquiries in my credit report that I do not recognize
If you see list of creditors in your credit report and you do not remember applying for credit with them, you may be a victim of identity theft. If you suspect identity theft you need to do the following-
- Call the financial institute or creditor and ask the status of the debt. Inform them that you suspect identity theft.
- If you realize this is indeed a case of identity theft, contact your local police and get a complaint number if possible
- Contact the credit bureaus and request a fraud alert to be put on your credit report. This means that any time a creditor pulls your report, they will be notified that you are a fraud victim and to contact you directly to verify your identity.
Make checking your credit a habit
Now that you know the importance of credit reports, make it a habit to check it regularly.
If you are unable to access your credit report more than once a year, consider keeping tabs on your score only. Most major Canadian banks offer free credit scores to their clients, so it is more easily available than a full credit report. If there is a major change in your credit score, then you do need to check your credit report to see the reason.
Building good credit takes time, so the earlier you start working on it the better. Keep yourself aware of your credit standing and keep learning on how to improve your credit.
For more on credit reports and scores, follow our series here- https://www.finjoy.ca/financial-education/credit-score/